Financial Impact with Holly Morphew, AFC® Financial Coach

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The Student Loan Effect

Total student loan debt now exceeds one trillion dollars, second in size only to mortgage debt. Think about that for a minute. Who qualifies for a mortgage? Typically adults with good credit, a sizable down payment, and many years of experience making a large payment for housing each month. Who qualifies for a student loan? Almost everyone. Correction. Almost every kid. In fact, debt to income ratio, credit score, and employment status are not taken into account when applying for a student loan according to

Two-thirds of current undergraduates have student loans and 45% of American families have a member with student loans. There are at least two problems with this. The first is, due to lack of financial literacy, young adults do not understand how a large debt such as a student loan will affect their personal finances. Secondly, a college degree does not anymore directly translate into a job.

With the rising cost of a college education and the changing economy, it's time for us to change as well. Wneed to provide more options for young adults than the traditional “go to college, take out student loans to pay for it, and cross your fingers you will get a job when you graduate.” As a result of this traditional thinking, the delinquency rate on student loans exceeds that of any other type of consumer debt. There are nearly seven million student loan borrowers in default. One-third of student loan borrowers who are making payments are three or more months behind on their payments. Just two years after they started repaying, ten percent of student loan borrowers will be at least nine months behind on their payments.

What are some alternatives? Work for one year before attending college to save money for tuition. Or, why not work and go to school? There's no rule that students must be in school full-time. For those students who choose to go to school full-time with student loans, a financial literacy class should be mandatory each year they are in school to prepare them for what they can expect when they graduate. This class will address their student loan payment, how to budget, the cost of living where they plan to live, and the average entry-level salary for their field of study.

What about skipping college altogether and attending a trade school or doing an apprenticeship? Many jobs go unfilled each year due to lack of skilled labor. Employers are looking for people with specific skills. Some employers care less about a college degree and more about a certificate for and/or experience in the specific requirement they need.

Finally, as a community, a state, and even a country, we need to make financial literacy a priority. Our younger generations' prosperity is up to us. Through mentoring and education, let's help them thrive instead of advocating a mountain of debt they can't, or don't know how, to repay.

For more information on this topic, contact Holly at

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Holly Morphew AFC®, Award–winning financial coach, author, global speaker, and multi-generational entrepreneur
Holly’s own journey to eliminating $67k in debt in her twenties, reaching financial independence in her thirties, and creating 11 streams of income are what inspire her to help others live their wealthy life.
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